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Green finance and ESG performance: A quasi-natural experiment on the influence of green financing pilot zones

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  • Ye, Xiaoyu
  • Tian, Xiangyu

Abstract

Environmental, Social, and Governance (ESG) performance are major elements of green finance policies. It effectively aligns the financial incentives with the sustainable development goals. This study focuses on how green financing policies affect green innovation and business environmental performance. This study uses the difference-in-differences model to examine how green finance policy affects the ESG performance of enterprises. The results show that companies in economically better-developed pilot zones, state-owned enterprises (SOEs), and those with fewer financial limitations drive more robust ESG performance based on the triple differences technique. The pilot program improves ESG performance despite tightening budgetary restrictions based on mechanism analysis. Thus, green finance policy positively impacts ESG performance, having better performance in state-owned enterprises (SOEs) in China. Policymakers should prioritize targeted green finance policies to boost ESG performance and support maximum environmental impacts.

Suggested Citation

  • Ye, Xiaoyu & Tian, Xiangyu, 2025. "Green finance and ESG performance: A quasi-natural experiment on the influence of green financing pilot zones," Research in International Business and Finance, Elsevier, vol. 73(PB).
    • Handle: RePEc:eee:riibaf:v:73:y:2025:i:pb:s0275531924004409
    DOI: 10.1016/j.ribaf.2024.102647
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